Tech Stocks to Surge Yet Again

Plus, the Treasury market is benefiting from the overnight intervention in dollar/yen.
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Tech stocks will roar again this morning, even if blue-chips and other stocks experience a pullback at the open. Stocks put in a lackluster performance overseas, and despite yesterday's slide in the

Dow

and

S&P

, those indices could suffer another bout of profit-taking before swinging upward again.

The S&P futures are currently down 4, about 3 below fair value, indicating a down opening for the market.

"You can't really look at the Dow and say this is the full market," said Bill Allyn, head of block trading at

Jefferies

. "It looks like tech is key again. But I think the big caps will come back again. They made a comeback yesterday from being down 100, and that was a good showing."

Both

Intel

(INTC) - Get Report

and

Yahoo!

(YHOO)

will report earnings after the close, but should continue yesterday's rally.

Yahoo! shares rose 33 5/8 to 449 in premarket trading, while Intel was up 1 1/2 to 141 1/8.

The

First Call

consensus of 31 analysts see Intel reporting fourth-quarter earnings of $1.07 per share. A total of 24 analysts are expecting Yahoo! to report earnings of 16 cents per share.

Morgan Stanley Dean Witter

downgraded its rating on three different tech companies, including

Broadcom

(BRCM)

, down 3/4 to 157 1/4 in premarket trading.

Meanwhile, the Treasury market is benefiting from the overnight intervention in dollar/yen by Japanese officials. The long bond was up lately by 18/32 to trade at 99 22/32, as the yield fell to 5.27%. The 30-year Treasury yield rose Monday as high as 5.37%, the highest intraday yield since Nov. 6.

However, bonds have fallen in recent weeks, reflecting the view that the

Federal Reserve

is unlikely to cut rates again in the coming months. The bond futures have risen only 2/32 in early trading.

Dollar/yen rose 3.1 to 112.11 overnight after a dollar-buying campaign was engineered by the

Bank of Japan

, the first intervention in dollar/yen since U.S. and Japanese officials jointly intervened to halt the yen's decline in July. The dollar had reached a 28-month low against the yen, and technical factors were expected to drive the dollar lower. Strength in the yen worsens the prospects of a economic recovery because it makes exports more expensive.

European stocks were mixed overnight. The

FTSE

rose 33.3 to 6118.30, while the

CAC

was down 34.07 to 4167.89. The

Dax

was down 36.08 to 5234.5.

Hong Kong's

Hang Seng

rose mildly, up 77.29 to 10711.56. The

Nikkei

, meanwhile, fell 7.51 points to 13360.97, rallying from early losses.

Tuesday's Wake-Up Watchlist

By

Brian Louis

Staff Reporter

    Ace

    (ACL)

    , a Bermuda-based insurer, has agreed to buy

    Cigna's

    (CI) - Get Report

    international and domestic property and casualty insurance businesses for $3.45 billion in cash.

    E*Trade

    (EGRP)

    and Sandy Robertson, founder and former chief executive officer of

    Robertson Stephens

    , announced plans to invest in a new full-service investment bank on the Internet, called

    E*Offering

    . E*Offering plans to provide individual online investors who are E*Trade customers with greater access to subscribed public offerings. E*Offering expects to begin underwriting its first public offerings later this year. E*Trade will own approximately 28% of the company and have an option to increase its ownership to 51%. Financial details of the deal were not disclosed.

    Coca-Cola

    (KO) - Get Report

    is close to announcing a five-year marketing alliance with

    Seagram's

    (VO) - Get Report

    Universal Studios

    division,

    The Wall Street Journal

    reported.

    Barry Diller

    , chairman of

    USA Networks

    (USAI) - Get Report

    , has plans to re-enter the movie business, the

    Los Angeles Times

    reported. The newspaper reported that Diller is negotiating with Universal Studios to take control of the specialty film distributor

    October Films

    , as well as some assets of

    PolyGram Filmed Entertainment

    , the newspaper reported, citing sources close to the transactions.

    Ascend's

    (ASND) - Get Report

    board plans to meet today to consider an acquisition offer from

    Lucent

    (LU)

    ,

    The Wall Street Journal

    reported. An acquisition could be announced as early as tomorrow, the

    Journal

    reported.

    Abbott Laboratories

    (ABT) - Get Report

    and

    Idun Pharmaceuticals

    , a privately held biopharmaceutical company, announced a worldwide research and development agreement to focus on the discovery and development of products to treat people with cancer. Under terms of the deal, Abbott committed $30 million, which includes an equity investment and research funding. Idun will receive milestone payments and royalties on products resulting from the research program.

    Morgan Stanley Dean Witter

    downgraded

    Alcoa

    (AA) - Get Report

    to underperform from outperform.

    Arrow Electronics

    (ARW) - Get Report

    said fourth-quarter earnings are likely to be below analysts' expectations due principally to lower-than-expected sales in northern and central Europe, coupled with continued pressure on gross profit margins in the company's North American components operations and certain Asian markets. The company said fourth-quarter earnings are expected to come in between 30 cents and 35 cents a share. The current four-analyst

    First Call

    consensus estimate projects earnings of 42 cents a share. In the year-ago period, the company earned 53 cents a share.

    Hillenbrand

    (HB)

    reported fourth-quarter operating earnings of 75 cents a share, in line with the five-analyst First Call consensus estimate and up from the year-earlier results of 67 cents a share.

    Merrill Lynch

    named

    McKesson

    (MCK) - Get Report

    its "focus one" stock of the week and set a price target of $120 a share.

    Network Solutions

    (NSOL)

    , a company that registers Web addresses, said it registered approximately 1.9 million new Web addresses in 1998, up from 960,000 last year. The company registers Web addresses ending in .com, .net, .org and .edu.

    Vail Resorts

    (MTN) - Get Report

    said it expects second-quarter and fiscal year 1999 results will fall below analyst estimates, reflecting the overall weakness in the Colorado ski industry due in part to unfavorable weather conditions. Vail said resort revenues are expected to be in the range of $155 million to $165 million for the second quarter.

    Merrill Lynch upgraded

    Washington Mutual

    (WM) - Get Report

    to near-term buy from near-term accumulate.